Pengxin drops Kidman bid, invests in Brazil

Following Treasurer Scott Morrison's preliminary decision to block the sale, the Chinese bidders have now withdrawn.

Dakang Australia Holdings has withdrawn its A$371 million ($277.8 million; €241.4 million) bid for S Kidman, after receiving a preliminary rejection from the Australian government.

Australian Treasurer Scott Morrison said he was likely to block the cattle properties deal which would have put more than 1 percent of Australia’s total land in the hands of a consortium led by Pengxin, because it was “contrary to the national interest”. The group backed by Pengxin, Shanghai CRED Real Estate and Australian Rural Capital was given 96 hours to respond to the government’s decision.

S Kidman chief executive Greg Campbell told the Sydney Morning Herald, “Given that there are four sizeable companies involved with directors and shareholders in four continents and four time zones, it was a ridiculously short timeframe to do anything.”

The group’s parent company, Shanghai Pengxin, has just acquired a majority stake in Brazilian agribusiness company Fiagril for $290 million.

Campbell linked the two deals saying, “Capital does flow around the world and, in this case, capital has flown to a competition business in Brazil that will definitely be competing on beef and grain markets with Australian products.”

Pengxin subsidiary Hunan Dakang Pasture Farming acquired a 57 percent stake in family-owned grain company Fiagril. The deal reportedly excludes the company’s shipping, biofuels and seed production businesses.

Based in Brazil’s major grain-producing Mato Grosso region, Fiagril’s operations include fertiliser, pesticide, seeds, storage and support operations for soybean, cotton, corn, milo, beans and rice producer

Chinese companies have been increasingly active in acquiring agri assets abroad, but have faced government opposition from target countries. State-owned ChemChina’s proposed $43 billion purchase of agrochemical giant Syngenta is slated for review by the US Congress, over whether the deal would impact national security. Last year,  New Zealand rejected an attempted $680 million sale of a 14,000-hectare Lochinver dairy farm to Pengxin.